Royal Surrey sold millions of pounds of NHS drugs in 'unacceptable' export trading
HSJ has uncovered the NHS hospital that sold millions of pounds’ worth of hospital drugs intended for NHS use onto the export market, despite government warnings the behaviour was “unacceptable”.
An HSJ investigation has revealed Royal Surrey County Hospital Foundation Trust is the trust whose flirtation with the pharmaceutical export market sparked concern at the Department of Health, which believed it could “rapidly” and “immediately” create serious shortages for vital hospital drugs.
Quite simply, if product is diverted in this way it is likely to have an immediate and dramatic impact on the availability of product to treat UK patients
But despite the DH’s concern the Royal Surrey’s trading activities helped shore up its foundation trust application. By December - the month it was awarded foundation status - the trust had almost doubled its performance on the principal profit rate measure used by the regulator Monitor from 4.6 per cent to 8.3 per cent.
The trust earned £4.6m in revenue over 10 months by buying up drugs at the NHS price and selling them to a wholesaler for export, as the low value of the pound meant they could be sold at a profit. It made £300,000 profit on the sales.
It only ended the practice last month - six months after the DH branded the trading “wholly unacceptable” and said it threatened the safe supply of medicines to the NHS.
There are now more than 40 branded and generic medicines in short supply in the UK. These include Zyprexa, which is used to treat schizophrenia, and Glivec, which is used to treat advance stage leukaemia.
Health minister Mike O’Brien has called for an emergency summit to address mounting NHS drug shortages, which he said were being exacerbated by “unscrupulous” speculators who were “putting profit before patients” by selling drugs intended for NHS use abroad.
HSJ uncovered the Royal Surrey’s activities by correlating information obtained through a Freedom of Information request with the trust’s finance reports.
The foundation’s finance director Paul Biddle told HSJ: “Yes, we did see this as an opportunity to make a margin.”
“I felt we hadn’t anything to hide in this. It was openly declared when we went through assessment with Monitor. They have always encouraged trusts to be entrepreneurial.”
He said the trust had not sold any drugs that were in danger of short supply to the NHS. But the foundation refused to give HSJ a list of the drugs which were traded, saying this was “commercially sensitive”.
The foundation ceased trading in hospital drugs in January - partly due to the public concern around the impact of so called “parallel trading”, and partly due to the diminished opportunity for a profit, as the value of the euro fell from a peak of 94p in October to 86p by the end of the month.
Internal memos released to HSJ show that some time before the end of May 2009 a whistleblower from the South East region alerted the DH that a trust in the region was suspected of trading drugs for export.
As HSJ reported in January 2009, the NHS was already experiencing drug shortages as the weak pound caused cheap imports to dry up and manufacturers imposed supply quotas to prevent community pharmacists from over-ordering for export.
But in an email to the whistleblower dated 27 May 2009, the NHS Purchasing and Supply Agency’s principle pharmacist Howard Stokoe said the spread of export trading to acute hospitals was a “serious concern” due to the relatively small volumes of drugs supplied to hospitals.
Mr Stokoe wrote: “Quite simply, if product is diverted in this way it is likely to have an immediate and dramatic impact on the availability of product to treat UK patients.”
“Not only would this compromise patient care it would also be damaging for the reputations of any NHS trusts involved in this practice.”
Mr Stokoe also warned that pharmaceutical manufacturers might regard onward sales for profit as an abuse of the NHS pricing agreement - jeopardising future negotiations for NHS discounts.
That exchange of emails culminated in a letter being sent from DH chief pharmacist Keith Ridge to all hospital chief pharmacists last July which said it was “wholly unacceptable” and “irresponsible” for NHS hospitals to export drugs. However, the Royal Surrey continued to trade for six months after this.
Mr Biddle told HSJ: “We absolutely assured ourselves the drugs being supplied were freely available. There was no question of diverting drugs needed for the NHS. But because of the publicity and the fact it was a short term accountancy opportunity we saw it for only a limited period. So we stopped as of January 2010.”
A spokesman for Monitor confirmed it was aware of the Royal Surrey’s drug trading, but he said: “So long as the drug trading does not affect UK patients or the ability of the trust board to focus on their core responsibilities this is not an issue on which we would take a view.”
In April 2010, HSJ revealed a number of drugs sold by the Royal Surrey were subsequently listed as in shortage. Click here to read the story and see the full list of drugs sold
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Readers' comments (17)
Anonymous | 16-Feb-2010 2:41 pm
I don't know why but this article just makes me smile.....
The DOH wants Trusts to think out of the box... Come up with new ideas for income generation.....
I think the only people who should be really cheesed off about this is the drug companies themselves.....
I know that posts will now talk about whether it's ethical.....blah blah
I think it's clever but the problem is that the government / doh want us to act like private businesses but with both hands tied behind our backs (ie so much control / audit / tick boxes / the list goes on).
You can't have both... We either run like a business or we run like the NHS..... At the moment we are just plodding but no one seems to know where!
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Anonymous | 16-Feb-2010 3:48 pm
Just wait until that nice Mr Cameroon becomes Obersturmbanfuherer and you all become Workers Co-operatives.
GP Fundholding and Contracting will seem like nothing by comparison?
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Anonymous | 16-Feb-2010 4:35 pm
HSJ home page says "HSJ names trust that made millions from 'unacceptable' export of hospital drugs". Made implies profit. Declared profit was £300k. I'm not saying there's anything proper about what they have done but your reporting is sensationalist.
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Anonymous | 16-Feb-2010 4:47 pm
I cant see what's wrong with this myself . Consultants have been on a go slow for years to drum up trade for the private market. Now that's cynical!
Or what about Trusts paying their own consultants overtime to hit 18 weeks targets despite there being spare capacity , already paid for by PCT's in ISTC's down the road.
Or Drugs companies giving free trips abroad to GP's for prescribing drugs of dubious benefit.
Or the healthcare industry employing senior government figures to lobby for their own interests.
etc
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Anonymous | 16-Feb-2010 5:12 pm
Let us consider why the NHS FT needed to do this. Could it be that they must deliver financial targets or suffer weekly reports and meetings by the regulator if their money is at all off track. Is it because they wanted some cash in the bank to help weather the force 12 storm ahead. Is it because the tariff is about the be cut yet again hiding billions in efficiency targets (double that every achieved in the NHS). Err...yes!
I believe it is unethical to trade drugs whether or not it affects NHS patients. I doubt it was on RSC's FT application form as a core business. Helpful of Monitor to overlook such practice. No doubt we will see more of these sort of actions as organisations get even more desperate to balance the books.
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Paul Tovey | 16-Feb-2010 5:26 pm
FOI Request Sent Today To Monitor
To Whom It Concerns
FOI Freedom Of Information requests
Can Monitor please give a list of all those Trusts (FT Trusts) where drug trading has taken place and NHS drugs intended for the UK population have been sold and exported to improve finances of Trusts - either in run ups to FT bids or in any other situation ?
Can Monitor confirm and supply details of any other instances where parallel trading of resources intended for UK NHS use has occurred and which Trusts by name are or have been doing that ?
Regards
Paul Brian Tovey
Independent Mental Health Monitor
NALM LINk Associate
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Anonymous | 16-Feb-2010 5:26 pm
Another thought -
According to a BBC World Service Radio News report this AM - there is apparently an exceptionally lucrative trade to be had from human cadavers - either whole or in part - any offers?
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Anonymous | 16-Feb-2010 5:32 pm
What a pathetic article and well done RSCH. The Journal needs to understand the extent of the financial problem being faced by the NHS. Why is it that Ministers say that the NHS has growth this year and next yet PCTs can't afford to pay for the work being done by FTs and NHSTs? Why is it that FTs are really struggling this year to hit targets and yet we have apparently not yet gone over the financial precipice? Get real. There are going to be lots more wheezes like this as desperation sets in. again I say well done RSCH.
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Anonymous | 16-Feb-2010 6:21 pm
A provider selling its spare capacity for profit? There is no scandal in that.
Its actually a very good idea, especially if the product is sold at a profit and said profit is then used to improve the care UK patients receive.
There is no new money in the health economy for the next financial year and efficiencies have to be made whilst providing care at levels of this year.
I wish I had thought of it for my trust.
We are encouraged to think outside the box when it comes to income generation and this is a perfect example, don't stifle creativity just because it appears slightly risque.
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John Adsett | 16-Feb-2010 7:50 pm
1. HSJ "sensationalist" ? - nah! How could anyone suggest such a thing?
2. Trade in cadavers - you have to be sure they're dead first.
3. Spare capacity is spare capacity, but woe betide anyone finding an entrepreneurial way of exploiting that - unless of course they are a fellow of an appropriate royal college.
4. Don't ever forget that this government's handbook (1984) was written by a man who "lost faith" in the labour party to the extent that he joined the ILP!!
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Anonymous | 16-Feb-2010 9:34 pm
It says a lot about Monitor that it wasn't bothered by the hospital running a side show. It says a lot about the hospital management than instead of increasing productivity and reducing costs it engaged in del boy activities. Anybody with an ounce of intelligence would know that the NHS contracts for drugs are agreed with a profit margin for the company to pay for research etc and will be country specific, size of contract... to then sell on is equivalent to flogging chanel in the high street, not something that any manager with an ounce of intelligence would want to be seen to be doing. Perhaps this is the issue. Brings us back to NHS management and Monitor, not PbR tariffs and sob stories.
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Steven Wrigley-Howe | 16-Feb-2010 10:54 pm
Great idea, fair play to the Trust - the DH is becoming more and more like the Football Association, an irrelevant bunch of old farts periodically crying 'unacceptable' when their own 'unacceptable' performance is exempt from public scrutiny. Would anyone except Ministers (desperate as always to have their backsides covered) notice if the DH disappeared?
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Anonymous | 17-Feb-2010 1:41 pm
Not much consideration in these postings for the patients with mental health issues requiring medication - how much pressure could be put on consultants not to prescribe if the Board wishes to divert drugs for profiteering - hopefully none of you will ever be in the position of requiring medication (although from some of the posts they are long overdue!). Well done Paul Tovey for trying to find out which other Trusts may have put Consultants in the position of holding back treatment to patients simply to tick the FT financial box.
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Anonymous | 17-Feb-2010 4:28 pm
Why is is that the Trust held back treatment for other patients?
They could only have sold spare capacity, I think its a red herring by Paul Tovey and the post above by jumping on this bandwagon to rty and further their own aims.
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Anonymous | 18-Feb-2010 2:12 pm
Many of these comments miss the point and seem unable to see much further than someone having come up with a clever wheeze. Its the PPRS that is the big issue here. The danger here is that if we lost that costs would be huge. The commercial in confidence defence for not coming clean is not very impressive.
Steven Wriggely Howe - you may be right but I suspect not. If the DH or someone did not negotiate the PPRS we would be in big trouble. The recent renegotiation saved £550m a little better than 300k in arbitraging pricing differences. We can't expect that the pharma companies will let us buy cheap in the UK and sell competitively against them elsewhere - that would be stupid.
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mike batt | 19-Feb-2010 3:09 pm
Weekly reporting to Monitor if their financial performance goes at all off track (anon 16 Feb 5:12PM).
This would be the "freedoms" of being an FT. Acheiving these freedoms is now also compulsory.
Is it just me, or does being an FT just confer a temporary glow of status when you first get approved, then mean nothing much?
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Paul Tovey | 22-Feb-2010 1:06 am
Anon (4 above)
You may be right ... But there again information hooking-about is never wasted - who knows I might get a seriously blood soaked herring linking to all the FOIA rods I've got set out ..
Mind you I am after some really big Marlin though .. Do any come in these Hot Service Journal waters I wonder ..
Kind regards .... A bit of a Netter ... PBT ..
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